CSE PRESS NOTE: Who is the one not playing by the rules – India or the US?

US charges that India’s National Solar Mission is discriminating against foreign solar companies

Hogwash, we say. The US has been dumping subsidised solar power panels in India. It is browbeating India to further the interests of its own solar companies. It is US which should be made answerable at the World Trade Organization

Chandra Bhushan

A few days ago, the United States filed a challenge in the World Trade Organization (WTO) against India’s National Solar Mission – the charge was that the Mission discriminates against foreign solar companies. US lawmakers have used phrases such as “India isn’t playing by the rules” to support this action.

The assertion is far from the truth.

Since the beginning of the National Solar Mission, which aims to make solar power affordable through its increased use and manufacturing, the US has used the loopholes in the Mission as well as climate finance to the advantage of its manufacturers. These manufacturers have gone on to sell highly subsidised solar panels to India. This, in turn, has made Indian solar manufacturing companies uncompetitive. Currently, an estimated 80 per cent of the Indian manufacturing capacity is in a state of forced closure and debt restructuring with no orders coming to it, while American manufacturers are getting orders from Indian solar power developers.

The US has been able to do so by using the climate 'fast start financing’ to its pervert advantage. Fast start financing is a US $30-billion fund set up under the United Nations Framework Convention on Climate Change. The fund, adopted at the Copenhagen climate meeting in 2009, was supposed to help developing countries deal with climate change impacts and limit greenhouse gas emissions.

The US has very ingeniously used this fund to promote its own solar manufacturing. The US Exim Bank and the Overseas Private Investment Corporation (OPIC) have been offering low-interest loans to Indian solar project developers on the mandatory condition that they buy the equipment, solar panels and cells from US companies. This has distorted the market completely in favour of US companies.

An estimation done by Centre for Science and Environment (CSE) shows that about half of all solar modules installed under the National Solar Mission have been manufactured by US companies. In a majority of instances where US manufacturers have sold modules in India, they have been able to do so because of the US government’s financial support. Thus, the biggest winner of the Solar Mission’s largesse so far has been the US manufacturing sector.

The US is worried about two things that are currently happening in India.

1. In November 2012, the Directorate General of Anti-Dumping and Allied Duties (DGAD), under the Union ministry of commerce and industry, initiated an investigation into solar cell imports from China, Malaysia, Chinese Taipei and the US. As per the DGAD, there is sufficient prima facie evidence of dumping of solar cells from the four countries. Obviously, with the majority of the imports coming from the US, American companies are threatened the most.
2. In December 2012, the Union ministry of new and renewable energy (MNRE) came out with its draft guidelines on the second phase of the Solar Mission. Under the first phase, there was a domestic content requirement mandate: all projects must buy domestically manufactured solar equipment. However, this was applicable only to crystalline PV technology and not thin-film PV technology. The US companies had used this loophole to export subsidised thin-film PV modules to India. Under the second phase, there is a demand from manufacturers as well as many think-tanks to make domestic content requirement also applicable to thin-film technology. If this happens, it will put a stop to the imports of subsidised solar modules from the US.

The action initiated by the US in the WTO must be seen in the context of what has been discussed above. The US is worried and is trying to browbeat India. India should not cow down. It has a very strong case to show to the world how the US has been using climate change to further the interests of its companies. The US is the one dumping cheap solar panels, not India.

Chandra Bhushan is the deputy director general of Centre for Science and Environment and the head of its Renewable Energy Unit